Arista Networks (ANET) Surges 17.5% After Strong Q2 Earnings
Arista Networks closed at $138.78, up 17.5%, after delivering strong Q2 results and upbeat guidance. The stock surged as revenue climbed 30% year-over-year and margins expanded, reinforcing its position in AI-driven networking.
Key Financials (Q2 2025 vs. Q2 2024):
- Revenue: $2.205B (+30.4% YoY, +10% QoQ)
- GAAP EPS: $0.70 vs. $0.52
- Non-GAAP EPS: $0.73 vs. $0.53
- GAAP Net Income: $888.8M (+33.6%)
- Non-GAAP Net Income: $923.5M
- GAAP Gross Margin: 65.2% (up from 64.9%)
- Non-GAAP Operating Margin: 48.8% (up from 46.5%)
Guidance – Q3 2025:
- Revenue: ~$2.25B
- Non-GAAP Gross Margin: ~64%
- Non-GAAP Operating Margin: ~47%
Arista continues to execute above expectations, with Q3 revenue guidance suggesting a sequential increase.
Operational Highlights:
- Record Operating Income: Non-GAAP operating income crossed $1B for the first time.
- Strong Product Growth: Product revenue grew 32% YoY to $1.88B, while services rose 22.7% to $327.8M.
- AI Campus & Branch Expansion: Arista rolled out Wi-Fi 7 access points, switching and WAN solutions tailored to AI-driven campus needs.
- Strategic Acquisition: Acquired Broadcom’s VeloCloud SD-WAN portfolio to enhance WAN capabilities across global enterprise locations.
- Global Supply & R&D Push: Increased manufacturing and R&D footprint in India under “Make in India” initiative.
- Leadership Addition: Hired Todd Nightingale (former Fastly CEO and Cisco exec) as President & COO to strengthen enterprise and cloud segments.
Cash & Balance Sheet Health:
- Cash & Equivalents: $2.23B
- Marketable Securities: $6.62B
- Deferred Revenue: Jumped to $2.79B from $1.73B YoY (+61%), indicating strong forward bookings.
- Share Buybacks: $983M in stock repurchased YTD, signaling confidence in long-term valuation.
Context vs. Peers:
- Arista’s 30%+ YoY growth outpaces many peers in networking and infrastructure, including Cisco and Juniper.
- Gross and operating margins remain industry-leading.
- Positioned well in the AI data center buildout theme alongside Nvidia ecosystem players.
Observations:
- The company’s broad exposure to AI-driven infrastructure, robust bookings, and SD-WAN integration gives it leverage against hyperscaler and enterprise tailwinds.
- Deferred revenue growth is a critical bullish signal, supporting revenue visibility into H2 2025.
Arista’s strong execution, AI-driven innovation, and expanding enterprise footprint make it a standout in cloud networking.